Why Kwasi Kwarteng's mini-budget caused an economic crisis in the UK : Planet Money Liz Truss, the new Prime Minister of the UK, was determined to change the British economy. Instead, her government's mini-budget helped kick off a mini-financial crisis.

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Economic anarchy in the UK

Economic anarchy in the UK

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Stefan Rousseau/Getty Images
BIRMINGHAM, ENGLAND - OCTOBER 04: Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng during a visit to a construction site for a medical innovation campus in Birmingham, on day three of the Conservative Party annual conference at the International Convention Centre in Birmingham on October 04, 2022 in Birmingham, England.  (Photo by Stefan Rousseau - WPA Pool/Getty Images)
Stefan Rousseau/Getty Images

A lot is going down politically in the UK. They're still dealing with the fallout of Brexit. King Charles III ascended to the throne after the passing of Queen Elizabeth II. And Liz Truss has become the new Prime Minister, following the resignation of Boris Johnson after months of scandal and controversy. It feels like an era's worth of change occurred within just the past month.

When Truss' new Finance Minister Kwasi Kwarteng announced an unexpected series of tax cuts last month, the potential for a financial crisis was added to the mix. The British economy was already facing 9% inflation, so markets reacted violently against this proposed jolt to spending. So violently that the British pound nosedived and interest rates went through the roof.

So how did the UK get here? On today's show, how one little mini-budget managed to kick off a mini-financial crisis.

Music: "Playing the Game," "Running Late," and "Parade Floats"

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